Time bars in demurrage claims: how is time calculated?
Where a charter party states that “Owners shall notify Charterers within 30 days after completion of discharge if demurrage has been incurred” and completion of discharge is in one time zone and owners’ notice is sent and received in another time zone, which time zone applies when calculating the 30 days? Or are the different time zones irrelevant?
West’s owner Member’s case in the English High Court provides welcome clarification on time bars for demurrage claims.
In the recent decision Euronav N.V. v Repsol Trading S.A. (The Maria) , the English High Court had to consider whether owners’ demurrage claim was time barred or if notification had been made in time, namely “within 30 days after completion of discharge”.
The Commercial Court held that, absent any general provision regarding dates and times in the charterparty, the completion of discharge is to be taken as having occurred on the date that it took place, as judged according to the place of discharge (therefore applying, in effect, the U.S. time zone). The Judge held that this was the case, even if, at the time that discharge occurred, it was already the next day in both owners’ and charterers’ (European) time zones.
This was owners’ application for a summary judgment for demurrage in the sum of US$ 487,183.12 plus interest.
The dispute arose under a charter party based on an amended Shellvoy 6 form, for the carriage of crude oil from Brazil (intention Santos) to 1 or 2 ports on the West Coast of the USA.
Clause 15 required owners to notify charterers within 30 days after completion of discharge if demurrage had been incurred, as follows:
15 (3) Owners shall notify Charterers within 30 days after completion of discharge if demurrage has been incurred and any demurrage claim shall be fully documented, and received by Charterers, within 90 days after completion of discharge. If Owners fail to give notice of or to submit any such claim with Documentation provided available, as required herein, within the limits aforesaid, Charterers’ liability for such demurrage shall be extinguished.
The charter party contained no general provision regarding dates and times.
On 24 December at 21:54 hours PST (local time), the tanker “MARIA” completed discharging operations at Long Beach, USA. Owners gave charterers their 30 day notice of demurrage on 24 January.
English law applied to disputes under the charter party and owners and charterers had their headquarters in Antwerp and Madrid, respectively. For these reasons, owners argued that, for the purposes of the 30 day time bar, completion of discharge had actually occurred on 25 December (either at 05:54 hours GMT or 06:54 hours CET), given that US time is 8/9 hours behind GMT and CET, respectively Therefore owners argued that their 24 January demurrage notice had been given in time, being on the 30th day after 25 December.
Charterers argued the completion of discharge was on 24 December local time in US and that, therefore, the demurrage notice was sent more than 30 days from completion of discharge and so owners’ demurrage claim was time barred.
High Court decision:
In a detailed judgment which considered English cases going back as far as 1808 and the English Statutes (Definition of Time) Act 1880, Mr Justice Henshaw found against owners and held the demurrage claim was time barred. Whilst the Judge agreed with owners that time starts to count on the day after the notice is given and not on the day of the notice, the Judge, however, held that “the date of completion of discharge is to be determined applying local time at the place of discharge”, even though this meant that, counting on an “elapsed time/hour” basis, owners did not have a full 30 days (as in 30 x 24 hours) in which to notify their demurrage claim.
The Judge based his reasoning on the fact that “The discharge of cargo from a vessel is a tangible physical event, which occurs at a specific location and in a particular time zone. It will in the ordinary course be recorded in documents, such as the Statement of Facts and any laytime statement, as having occurred at the time and date current applying local time. A contracting party would naturally expect the date stated in such documents to be the date of completion of discharge for contractual purposes….”.
The Judge held that a contract would require an express term if the parties wanted to depart from what the Judge termed “the natural starting point”, namely that events should be timed in accordance with local time.
Interestingly, Mr Justice Henshaw also pointed out that the date of the discharge of the cargo is significant not only for the purpose of notification of demurrage claims, but also for claims under Hague or Hague Visby Rules.
The legal costs of this case, including owners’ liability for charterers’ agreed recoverable costs, were supported and paid by the Club under owner Members’ Defence cover.